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At Land Bank: A Good Year

Martha's Vineyard Land Bank revenues will fall slightly
below the $8.5 million record set in the last fiscal year. With
the close of the fiscal year but two weeks away, land bank
executive director James Lengyel projects ending the year with
$7.6 million.

Given the recent downturn in the economy, Mr. Lengyel and
the land bank commission expected this drop. In fact, the
commission predicted a 15 per cent decrease for this year and
the next two years. The decline for the present fiscal year
represents only an 8.4 per cent decrease.

"It's as we anticipated. That's all anyone in capitalism can
ask for," said Mr. Lengyel.
The 8.4 per cent drop by no means indicates insufficient
funds within the land bank, particularly considering the record
leap in revenues they experienced last year - from $6.2 million
in 1999 to $8.5 million in 2000.

Aside from the slip in revenue, the land bank recorded a
trend of fewer total transactions and more high-dollar sales. To
date, 72 transactions exceeded the $1 million mark out of 1,592
total sales. That means fewer than five per cent of all
transactions account for 56 per cent of land bank revenues for
the fiscal year. In the 2000 fiscal year, 69 transactions
crossed $1 million, but these sales were out of a pool of 1,921
transactions.

In other words, the bulk of land bank revenues can be
attributed to a small number of high-dollar transactions. Also
this year, the number of transactions under $1 million has
fallen off - from around 1,852 in 2000 to 1,520 in 2001.

In general, the numbers of million-dollar sales have jumped
tremendously since 1994. In the 1994 calendar year, only 12
properties sold for over $1 million. The number of high dollar
transactions slowly climbed for the next four years and then
nearly doubled from 1999 to 2000. In the 1999 calendar year,
only 47 transactions exceeded the $1 million mark. In the year
2000, 81 properties sold for seven figures.

While these trends may be of interest in the real estate
business, the stability of the land bank is not affected by
these patterns.

"We don't need to pay that much attention to the bricks and
mortar of where the money is coming from. As long as revenue
fundings in gross are okay, we'll be fine," Mr. Lengyel said.

The downshift in the economy did, in fact, affect how the
land bank invests its funds. When the economy began to sour not
even a year ago, the commission pulled the principal they had
invested in stocks back into more stable investments - namely
bonds. They left the interest in the stock market to ride the
tide. This redirection buffered the fund from the market's
instability.

"When your commodity is so inflation-sensitive, you need to
be careful," Mr. Lengyel said.
The drop in revenues does not relate to an increase in
exemptions from the 2 per cent land bank real estate tax. Only
46 per cent of transactions this year qualified for an
exemption. Exemption rates from previous years typically sit at
the 50 per cent mark.

Most of the revenues resulted from high-dollar purchases
that did not qualify for exemptions.
"Most of these are arms-length transactions between people
who don't know each other," Mr. Lengyel said. Transactions
between family members and the first $100,000 of a first-time
homeowner's purchase are exempt from the tax.

As June creeps into the busy months of July and August,
Island business owners speculate how the national economic
slowdown will affect summer profits. Mr. Lengyel said this
preseason anxiety is entirely normal for a resort economy.

"This is about as old as resort towns themselves," he said.

But Mr. Lengyel admits his absence of concern can be
attributed to riding the tide of economic ups and downs through
the years - including the 31 per cent fall in land bank revenues
in 1990.

Out of the $63 million worth of properties that town
advisory boards want to acquire in the next four years, Mr.
Lengyel said his agency expects it can commit to at least half
of them.